When someone walks into the branch of a financial institution to open an account, the branch personnel need to answer two questions. First, is this person who they say they are? Second, do we want to do business with them?

After a cursory examination of the person’s driver license and a few background questions, most branches consider the first question settled. They focus most of their attention on the second question. For example, they’ll use a risk-analysis service like TeleCheck to determine if the applicant has a history of writing bad checks. They’ll often perform other queries, as well.

If the check analysis and other analyses don’t raise any red flags, the branch staff will typically open an account for the applicant.

Do you see the danger here?

All the data analysis performed to answer the second question is predicated on a correct answer to the first question. Figuring out if Jane Smith at 123 Meadow Street has ever bounced a check is relevant only if the person standing in front of you really is Jane Smith. If it’s really Mary Jones posing as Jane Smith, all your analysis about Jane Smith is only leading you astray. In fact, Mary Jones may have chosen to impersonate Jane Smith precisely because she knows Jane Smith has a high income and a good credit history.

Back-office exception handling is not a substitute for determining immediately whether or not customers are who they say they are. Discovering two days after an account has been opened that the woman claiming to be Jane Smith was really somebody else is practical knowledge gained impractically late—by then, the institution has invested its time and money in onboarding a customer who’s going to turn out to be trouble.

To defeat fraud, financial institutions need identity verification that takes place in real time. Branch personnel need to be able to determine instantly whether an applicant is who they say they are. Only real-time identity verification can ensure that other risk-analysis services—such as querying a person’s check-writing history—provide genuinely useful knowledge, instead of simply furthering a fraudster’s deception.